T-Mobile Is Finally Getting the iPhone

In 2013 T-Mobile will offer the iPhone—though the company didn’t specify which model. T-Mobile CEO John Legere shared, however, that T-Mobile’s terms with Apple are nothing like Sprint’s volume agreement for which it had to pay billions up front to get. . When T-Mobile rolls out the iPhone “it will be a dramatically different experience [for customers].”

T-Mobile’s original plan was to start its LTE rollout in mid-2013. For a number of reasons, Legere said, that plan has been accelerated and by mid-year T-Mobile will have a “really smoking” LTE network that will cover 200 million to 225 million people in key markets.

Legere said he listens to an hour’s worth of customer calls each day. “Customers are really still pissed off at the very unpredictable billing, very unclear pricing, restrictive and confusing upgrades and unfair treatment of loyal customers in this whole way that we sell them a phone and bury the costs into a long-term contract and tie them in,” he told investors. In undoing all these established ways of doing business, T-Mobile wants to be the “un-carrier.”

T-Mobile plans to move entirely to Value Plans, which 80 percent of its customers are already choosing. Those who do accept the plans statistically tend to stay with the carrier two months longer than those who don’t. The plans offer subscribers low upfront costs, even on a device like the iPhone and save T-Mobile from having to pay a hefty subsidy.

While Value Plans are based on a two-year contract, customers can trade in their devices at any time and stay on the contract services they have. T-Mobile has a plan to refurbish the traded-in devices, said Legere, enabling it to “actually make a margin” on the process.

T-Mobile is aggressively targeting AT&T and what it calls “AT&T switchers”—AT&T customers who have a poor opinion of that carrier’s call quality and network capabilities and so are open to switching. “You love your iPhone, you hate AT&T,” said Legere. “I want you to get used to that tone, because that is the way we’re going to play,” Legere advised.

For about nine years, said Legere, T-Mobile lead the industry in customer care, but over the last few years, “we slipped a bit.” That’s changing, though. Calls to customer care are down 13 percent, handset exchanges are down and dropped calls have decreased by 10 percent.

The combination of the MetroPCS and T-Mobile spectrum holdings will create a unique swath in the AWS band, said CTO Neville Ray. “It will be highly performing—we can double speeds. This network is going to pack a significant punch at a critical time in the U.S. marketplace, one that I think will be the envy of our competition,” Ray said.

The real growth opportunity for carriers, said CFO Braxton Carter, is in the no-contract space. T-Mobile believes that, with MetroPCS, it is “uniquely positioned to play aggressively in that space.” During the third quarter, said Legere, T-Mobile added 365,000 no-contract customers, making it the “No. 1 player in the no-contract space.”

There’s a three-phase marketing agenda in place. Phase 2 is a shift away from the “nice-girl advertising” T-Mobile has been doing to something “more edgy.” The week before Thanksgiving, T-Mobile tried out this edgy approach. “We actually had almost a 70 percent year-over-year traffic increase on the Friday that we launched this,” said Legere. “So we can move the needle.”